We leased our minerals in Alfalfa County Oklahoma in the 1970's; after producing for decades, it's now non-productive and we would like to re-lease it. The lease provisions say the operator must pay royalty or shut-in fee to hold the lease & are in default if neither is paid for 12 months. We've recieved neither payment for 2+ years.
Question: what steps should we take to force the operator to offically terminate the lease? Want to ensure we have our ducks in a row before contacting operator because we've heard the deck is stacked in favor of the operator to continue holding the lease even if they are way behind in payment.
Unless the lessee has attempted to pay the royalties/shut in payments and has not been able to deliver these payments to you for some valid reason, I think the facts are stacked in your favor, not the lessee. If your address has not changed since you recieved the last payment, this should not be an issue. If your address has changed and you did not notify the lessee, you need to notify the lessee and request any non-delivered payments. Assuming the lessee has had your correct address and the lease does not allow for small royalty payments to be aggregated for more than one year, I would send the lessee a letter, stating that you have recieved no royalty or shut-in payments for x months and that therefore the lease has terminated by its own terms. Demand a release or in lieu thereof, proof that they have made such payments. Give them a set amount of time to respond. If you are sure of your facts regarding the lease terms, and non-payment, the burden is on them to prove you wrong. You can also check with the Corporation Commission to see if the well(s) have actually produced anything and if not, include this information in your letter. You could also file of record an affidavit which states that the lease has terminated by its own terms in order to put others on notice.
Roger:
I would tend to agree with Tim, but you need to be completely in understanding what the Oklahoma laws state in regards to inactive wells. I would contact this state agency and see when the last field inspections were made on these wells and what violations were found. Get all your evidence together and approach this company with demands to release the current lease and submit the facts.